Market Wrap For March 26: Markets Close Near Session Lows In Yet Another Volatile Trading Session
U.S. stocks failed to rise in a choppy session which began the day in positive territory. Shares reversed and turned negative with technology stocks leading the way.
The CBOE Volatility Index, also known as the "fear index" rose 3.9 percent to 14.57 despite economic data released today coming in better than expected.
Speaking in Hong Kong, the Federal Reserve's St. Louis Chief James Bullard said that the outlook for the U.S. economy is “quite good” and is projecting the unemployment rate to fall below six percent by the end of 2014.
- The Dow lost 0.60 percent, closing at 16,268.99.
- The S&P 500 lost 0.70 percent, closing at 1,852.56.
- The Nasdaq lost 1.43 percent, closing at 4,173.58.
- Gold lost 0.82 percent, trading at $1,330.70 an ounce.
- Oil gained 1.02% trading at $100.21 a barrel.
- Silver lost 1.10 percent, trading at $19.76 an ounce.
News of Note
MBA Mortgage Applications Composite Index fell 3.5 percent compared to a decline of 1.2 percent last week. Purchase index fell 3.0 percent compared to a decline of 1.0 percent last week. Refinance index declined 8.0 percent compared to a decline of 1.0 percent last week.
February Durable Goods rose 2.2 percent, ahead of the 1.0 percent expected and January's decline of 1.3 percent.
EIA Petroleum Inventories showed that Crude rose 6.6 million barrels, gasoline declined 5.1 million barrels and distillates rose 1.6 million barrels.
U.S. March PMI Services Index Flash read 55.5, above the consensus of 54.2 and a prior reading of 53.3.
A World Trade Organization dispute settlement panel favored the U.S. in it claims that China's imposition of export restraints on rare earth minerals such as tungsten and molybdenum breach WTO rules.
Analyst Upgrades and Downgrades of Note
Analysts at SunTrust Robinson Humprhey initiated coverage of athenahealth (NASDAQ: ATHN) with a Neutral rating and $170 price target. Shares lost 1.73 percent, closing at $161.47.
Analysts at Citigroup maintained a Sell rating on BlackBerry (NASDAQ: BBRY) with a price target raised to $8 from a previous $4. Shares lost 2.14 percent, closing at $9.16.
Analysts at UBS upgraded The Carlyle Group (NYSE: CG) to Buy from Neutral with a price target raised to $38 from a previous $36. Shares gained 4.82 percent, closing a $32.86.
Analysts at UBS maintained a Neutral rating of Cliffs Natural Resources (NYSE: CLF) with a price target lowered to $20 from a previous $24. Shares lost 2.06 percent, closing at $19.25.
Analysts at Susquehanna upgraded Corning (NYSE: GLW) to Positive from Neutral with a price target raised to $25 from a previous $15. Shares hit new 52 week highs of $20.69 before closing the day at $20.42, up 1.82 percent.
Analysts at Citigroup upgraded Garmin (NASDAQ: GRMN) to Buy from Neutral with a price target raised to $65 from a previous $50. Shares hit new 52 week highs of $56.77 before closing the day at $55.36, up 1.65 percent.
Analysts at Credit Suisse maintained a Neutral rating on Nike (NYSE: NKE) with a price target raised to $80 from a previous $72. Shares lost 0.57 percent, closing at $73.23.
Analysts at Wunderlich downgraded Panera Bread (NASDAQ: PNRA) to Hold from Buy with a price target lowered to $190 from a previous $205. Shares lost 8.49 percent, closing at $170.05.
Analysts at Barclays upgraded Sirius XM Radio (NASDAQ: SIRI) to Overweight from Equal-weight with a $4 price target. Shares lost 0.63 percent, closing at $3.15.
Analysts at UBS initiated coverage of Tesla Motors (NASDAQ: TSLA) with a Neutral rating and a price target of $230. Shares lost 3.39 percent, closing at $212.96.
Analysts at JPMorgan maintained an Overweight rating on Walgreen (NYSE: WAG) with a price target raised to $68 from a previous $64. Separately, analysts at Macquarie downgraded Walgreen to Neutral from Outperform with a price target raised to $68 from a previous $64. Shares lost 2.24 percent, closing at $64.93.
Analysts at UBS downgraded Walter Energy (NYSE: WLT) to Neutral from Buy with a price target lowered to $8 from a previous $25. Shares lost 4.76 percent, closing at $7.40.
Equities-Specific News of Note
Citigroup's (NYSE: C) capital plan was not approved by the Federal Reserve. The Fed said that Citi's plan did not fix previously raised issues. Shares lost 0.28 percent, closing the day at $50.16 but were trading lower by 4.33 percent at $47.99 after hours.
Total (NYSE: TOT) will acquire a 40.1 percent stake in the Elk-Antelope gas field in Papau New Guinea from InterOil (NYSE: IOC) for $1.62 billion to $3.5 billion, depending on how much gas can be extracted in the region. Shares of Total gained 0.65 percent, closing at $65.20 while InterOil gained 2.32 percent, closing at $63.55.
In an effort to attract teens, Sears (NASDAQ: SHLD) will launch a new brand titled Seventeen which will include clothing, shoes and accessories. Shares lost 2.77 percent, closing at $46.64.
Toyota (NYSE: TM) said that it will spend $3.5 billion to buy back shares over a ten month time-frame beginning after its shareholder meeting in the summer. Shares gained 1.91 percent, closing at $110.53.
SAP (NYSE: SAP) has agreed to buy Fieldglass, a provider of cloud software intended to better control contingent labor and services. Terms were not initially disclosed. Shares gained 0.80 percent, closing at $79.33.
According to Marbridge Consulting, Tencent has agreed to buy a 20 percent stake in the Chinese online video platform Youku (NYSE: YOKU) for at least $300 million in cash. Shares of Youku gained 3.17 percent, closing at $28.63.
Kinder Morgan Partners (NYSE: KMP) said that it will invest $1 billion to expand its carbon dioxide network with a 213 mile pipeline which will transport CO2 from the company's St. Johns source field in Apache County, Arizona to its Cortez Pipeline in Torrance County, New Mexico. Shares gained 0.19 percent, closing at $73.34.
SunPower (NASDAQ: SPWR) has sold over 70MW of solar cells to Chinese based Huaxia in what the company calls “a first step” to enter the Chinese market. Shares gained 1.31 percent, closing at $31.68.
Barrington Capital continues its activist battle against Darden Restaurants (NYSE: DRI) by saying that it has lost confidence in the ability of its CEO Clarence Otis to lead the company. The activist fund wants a new CEO to lead the company in addition to an independent chairman and more aggressive spin-offs. Shares gained 0.20 percent, closing at $50.81.
Winners of Note
Last night, Five Below (NASDAQ: FIVE) reported its fourth quarter results. The company announced an EPS of $0.47, beating the consensus estimate of $0.45. Revenue of $212 million beat the consensus estimate of $207.98 million. Shares surged after hours and in to today's trading session as management didn't issue any warnings on traffic or promotional activity in its guidance issue. The company sees its full year EPs to be $0.86 to $0.89, in-line with the consensus estimate of $0.87. Revenue is expected to be $672 million to $678, versus a consensus estimate of $673.4 million. Shares surged higher by 11.42 percent, closing at $42.34.
Decliners of Note
Shares of newly listed King Digital (NASDAQ: KING) opened for trading for the first time at $20.50 after pricing its IPO at $22.50. Shares closed the day at $19.00, down 15.56 percent.
According to Re/code, Google has “seriously sniffed around” Oculus VR before Facebook (NASDAQ: FB) acquired the company on Tuesday. Facebook's CEO Mark Zuckerberg said that Oculus is “way ahead” of rival products while Oculus CEO Brendan Iribe claimed that Facebook's resources will help make it Rift headset a cheaper device and can better compete in non-gaming applications. Of note, following Facebook's $16 billion plus acquisition of WhatsApp in February, the company said that it was “done for a while” with major deals. Analysts such as Victor Anthony at Topeka Capital noted that digesting two major acquisitions at one time is a new concept for Facebook's management team and presents risks that could distract attention away from the core business. Shares of Facebook lost 6.94 percent, closing at $60.38.
Insmed's (NASDAQ: INSM) Arikayce treatment for lunch infections has failed to meet a primary endpoint in a Phase II trial. Patients with treatment-resistant nontuberculous mycobacterial lung infections were given standard therapy in addition to Arikayce or a placebo. The study failed to reduce bacterial density among the trial of 90 patients. Patients who received Arikayce had more side effects than those who were just given a placebo. Shares lost 13.09 percent, closing at $15.90.
The Data Monitoring Committee that has been overseeing Exelixis' (NASDAQ: EXEL) Phase III trial of its Cabozantinib treatment for prostate cancer has recommended that the study be continued. This is disappointing news as investors had expected the study to be stopped for positive efficacy. Shares lost 39.36 percent, closing at $3.90.
On Tuesday, Plug Power (NASDAQ: PLUG) surged around 50 percent after the company said that it will reveal details of a new order with a “global automaker.” Shares pulled back today after it has become clear that the company's CEO Andy Marsh already hinted of the order in an earnings conference call on March 13. A company spokesman confirmed that Plug Power won't be putting fuel cells into the actual cars but will provide hydrogen fuel-cell units for lift vehicles. Shares lost 23.94 percent, closing at $6.45.
Quote of the Day
"I think it's going to be longer than that indication ... We're not going to flip a switch from easy money to tight money. We're not going to flip a switch where overnight you go from one environment to a radically different environment. I don't see that happening. The environment after the beginning of normalization of innterest rates is going to remain, I think, very accommodative for some time after that decision.” – Federal Reserve Bank of Atlanta President Dennis Lockhart, speaking on Tuesday at a business conference in Atlanta.
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